Defendants are likely to be more willing to challenge claims after a landmark judgment on a key element of the Jackson reforms.
A ruling in Gosling v Screwfix and Anor, handed down last month by Cambridge County Court, found the claimant had significantly exaggerated the extent of his injuries following a fall from a ladder.
Under the Jackson reforms, qualified one-way costs shifting (QOCS) shields personal injury claimants from having to pay the legal costs of defendants, even if their cases are unsuccessful.
But an exemption can be made if the claimant is deemed to have been 'fundamentally dishonest'.
This argument was used by the defendant's representative, insurance law specialist BLM, who showed the court he had exaggerated his injuries through covert surveillance commissioned by the defendant's insurer.
His Honour Judge Maloney (pictured) ordered the claimant to pay Screwfix's costs on an indemnity basis, in what is believed to be the first such finding since the implementation of the new costs regime.
Matthew Ford, partner at BLM, which represented the defendant, said the case will give renewed hope to insurers to contest cases they are unsure about: 'It has been a concern that personal injury claimants - including those that exaggerate their claims - will be able to pursue cases with impunity, in the knowledge that they will not be liable to pay defendants' legal costs even if they lose.
'This case will help defendants and their insurers to challenge the protection of QOCS, when a significant element of the claimant's claim is exaggerated, and hopefully, recover their costs.'
The judge held that, in significantly exaggerating the extent of ongoing symptoms, the claimant's conduct was dishonest, and designed both to deceive and give a false impression.
He also held that dishonesty, crucial to around half the value of a claim, was, 'on any view' sufficient to be characterised as fundamental. As a result, he was satisfied, on the balance of probabilities that the claim was fundamentally dishonest.
Gosling's original injury was sustained by a fall from a ladder in 2008 and the case dates from 2011 - prior to the Jackson reforms and QOCS.
However, because there was a BTE funding agreement in place, Mr Gosling subsequently sought QOCS protection a matter of weeks before the hearing of the case in 2014, leaving the defendant with no option but to make an application for a finding of fundamental dishonesty.
Ford added: 'This judgment shows that it is not necessary for an entire claim to be fabricated - significant exaggeration is sufficient for a claim to be defined as dishonest.
'Claimants who are exaggerating their injuries should be aware that defendants are prepared to challenge this and, with the assistance of the Gosling decision, will seek orders allowing enforcement of adverse costs orders.'